Columbia University Agrees to Settle $ 13 Million Excessive Fees Lawsuit

Parties to lawsuit alleging trustees of two Columbia University pension plans engaged in violations of the Employee Retirement Income Security Act (ERISA) that caused plan members to pay excessive fees agreed to settle.

The case is a consolidation of two lawsuits brought during the same week in 2016. In 2019, US Justice of the Peace Stewart D. Aaron of the US District Court for the Southern District of New York advised a district court judge dismisses Columbia University’s petition to dismiss the claims in the lawsuit as well as its petition to dismiss certain testimonies from the plaintiffs’ expert witnesses.

Claims in the trial understood that Columbia University has selected and retained expensive, underperforming investment options that have consistently and historically underperformed their benchmarks and similar funds. Further, the complaint said Columbia University loaded the plans – the Columbia University Agent Retirement Plan and Columbia University Voluntary Retirement Savings Plan – with many Retail share class options that were more expensive than institutional share class options in the same mutual funds. that were otherwise available for inclusion in the plans.

The complaint also referred to annuity products offered by the plans, which place restrictions on when participants can liquidate product assets and charge a redemption fee if they liquidate assets before the restriction period. According to the complaint, Columbia University used two archivists for its plans, TIAA and Vanguard, which caused plan participants to pay redundant, excessive and unreasonable fees for record keeping and administrative services.

Complainants’ attorney, Schlichter Bogard & Denton, notes in a statement that after the complaint was filed, the plan trustees consolidated the administrative services of the plans and capped costs at a fixed fee per participant, returning the sharing of costs. income to plan members.

In addition to a payment of $ 13 million, the university agreed to non-monetary arrangements, including hiring an independent consultant to solicit competitive bids for administrative services over the next three to four years. The university has also agreed to maintain the lowest share class of the plan’s investments and to prohibit the registrar from using confidential information obtained from plan members to sell other investment and management services. of heritage. Columbia University will also ensure that all participants are made aware of their ability to exit assets from frozen investment options.

the settlement agreement states that Columbia University “denies all liability for the claims made in the class action suit and maintains that it is without fault or liability.”

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